Gold’s value remained steady on Wednesday, with the demand for this safe-haven asset, spurred by the unrest in the Middle East, counteracting the diminished prospects of a rate cut in the U.S.
The price of spot gold was unchanged at $2,380.77 per ounce by 12:15 p.m. ET (1615 GMT), having reached a record peak of $2,431.29 last Friday.
Meanwhile, U.S. gold futures saw a slight decline of 0.5% to $2,396.70. “The ongoing geopolitical tensions are lending support to gold prices, and should the situation intensify, we could see values approaching the $2,500 mark,” commented Phillip Streible, the chief market strategist at Blue Line Futures in Chicago. “Gold prices will only come lower if central banks stop buying or if investors go back to a risk-on phase,” he said.
Leading officials from the U.S. Federal Reserve, including Chair Jerome Powell, refrained on Tuesday from indicating a timeline for potential interest rate reductions, emphasizing the necessity to maintain a tighter monetary policy for an extended period. Despite this, the market is factoring in a 71% probability of a rate cut in the U.S. by September. Elevated interest rates diminish the attractiveness of non-interest-bearing assets like gold.